agreeing with majority that conduct of parties demonstrated a contract, and noting that quantum meruit would therefore generally be precluded
How later courts described this case
- agreeing with majority that conduct of parties demonstrated a contract, and noting that quantum meruit would therefore generally be precluded
Written by the judges who cited it.
The opinion
Opinion issued January 31, 2012
In The
Court of
Appeals
For The
First District
of Texas
————————————
NO. 01-10-00041-CV
———————————
wps, inc. , Appellant
V.
expro
americas, llc ,
Appellee
———————————
surface
production systems, inc., Cross-Appellant
V.
wps, inc. , Cross-Appellee
On Appeal from the 189th District Court
Harris County, Texas
Trial Court Case No. 2006-80212
O P I N I O N
Appellant/cross-appellee,
WPS, Inc. (“WPS”), challenges the trial court’s take-nothing judgment, entered
after a jury trial, against it and in favor of appellee, Expro Americas, LLC
(“Expro Americas”), in WPS’s suit against Expro Americas and its subsidiary, appellee/cross-appellant,
Surface Production Systems, Inc. (“SPS”), for breach of contract, quantum
meruit, and promissory estoppel. In its
sole issue, WPS contends that the trial court erred in granting Expro Americas
judgment notwithstanding the verdict on the ground that there is no evidence
supporting the jury’s findings against Expro Americas.
Expro
Americas, in its cross-points, [1] challenges
the jury’s findings made against it, and it joins SPS, in SPS’s cross-appeal, challenging
the trial court’s judgment entered against SPS on WPS’s claims. In eight issues, Expro Americas and SPS
contend that there is no evidence that there was an enforceable contract between
them and WPS for the purchase of specially made equipment, Expro Americas and SPS’s
requirement in its purchase orders that they first issue a “release to proceed”
before WPS was to make the “specialized equipment” rendered any promise “illusory,”
the requirement of the issuance of a “release to proceed” constituted a “condition
precedent,” the “progress payment and cancellation charges” awarded to WPS by
the jury are not legally recoverable damages on WPS’s breach-of-contract claim,
the trial court erred “in commenting on the evidence and erroneously
instructing the jury as to contract interpretation,” there is no evidence to
support WPS’s quantum meruit or promissory estoppel claims, and the trial court
erred in not admitting into evidence Expro Americas and SPS’s pretrial offers
to WPS to “pay cancellation charges.”
We
reverse the trial court’s judgment notwithstanding the verdict in favor of
Expro Americas, and we render judgment in favor of WPS on its claims against
Expro Americas. We affirm the remaining
portions of the judgment.
Factual
and Procedural Background
In early 2006, SPS, a
wholly-owned subsidiary of Expro Americas, was involved in negotiations with
Conoco Venezuela to work on the development of an oil and gas field in
Venezuela. In furtherance of this proposed
development, SPS solicited WPS, which was in the business of making gas
compressors, for a proposal to construct three gas injection compressor
packages to be installed at an offshore Interim Production Facility (the “IPF”)
for the temporary processing of crude oil.
Following preliminary negotiations
between the parties, Tom Caime, WPS’s engineering supervisor, submitted to SPS on
April 10, 2006 a proposal for the delivery of three gas compressor packages with
a total net price of $4,143,066 and an estimated “ship date” of “20–22 weeks
after order acceptance by an officer of WPS.”
Caime set forth detailed “terms of payment” with 10% of the purchase
price due “[u]pon WPS[’s] acceptance of order,” a cancellation charge of “2% of
contract value” if the order was cancelled “within 30 calendar days,” and
separate charges payable to certain providers of component parts, including $27,000
for Reliance, the proposed supplier of the motors, and $107,000 for Dresser-Rand,
the proposed supplier of the compressors.
Caime noted that WPS’s proposal was subject to its “standard terms and conditions
of sale,” which he attached, and the “Crine/Logic terms and conditions,” which
had been previously provided to WPS by SPS, were “currently under review.”
On April 11, 2006, Kevin
Galvin, SPS’s vice president, sent WPS a letter expressing “Expro’s” “intent to
issue a Purchase Order” for the three injection compressors for a total price
of $4,143,066, but requiring that delivery be “on or before September 5,
2006.” In regard to “[p]ayment [t]erms,”
Galvin provided that $217,361 would be paid “on submittal of mechanical
installation drawings” and 10% would be paid upon obtaining a “Release to
Proceed (to be before [May 11, 2006]).” Galvin
noted that terms and conditions were “to be agreed” upon and a “[c]onfirming [p]urchase
[o]rder” would be issued “on or before . . . April 17, 2006.”
On April 12, 2006, Caime,
in response to “Expro’s” “letter of intent,” sent Galvin a reply e-mail stating
that WPS needed an “immediate Release to Proceed” before it could begin work
and “order the critical equipment without which the price and delivery of our
supply will be extended.” Caime noted
that “any delay in the purchase” would cause “the supply of [the] packages [to]
suffer,” WPS could not order equipment without the Release to Proceed, and it
could not “proceed very far with engineering and design without vendor
drawings, studies, and data that are not forthcoming without our purchase of that
equipment.” Caime explained that the
Dresser-Rand compressor price that WPS used in its proposal was set to expire
the next day, a price increase would apply afterwards, and other “vendor
proposals” would also expire before the “suggested [May 11] date.” Caime requested other “modifications” to the
letter of intent, including a shipping date calculated 20 to 22 weeks from
acceptance of “written” and “firm” purchase order, “cancellation charges as
noted in [WPS’s] proposal,” and terms of payment of 10% “with purchase order”
and 10% on submittal of “approval drawings.”
Caime requested an agreement “today,” so that WPS could place equipment
orders the following day.
On April 12, 2006, Galvin,
in a reply e-mail to Caime, stated that WPS was “released to proceed on the
order subject to” the conditions that “[i]f [the] order [is] cancelled on or
before May 11, 2006, . . . Expro’s financial liability is the cancellation
charges per your proposal” and the terms and conditions “need to be agreed for
the [purchase order].” Galvin agreed to
“incorporate [WPS’s] payment terms into the [purchase order]” and noted that he
“plan[ned] to issue” the purchase order the next day, but was “waiting” on
“approval.” Caime immediately responded
with an e-mail stating that WPS would “await [SPS’s] purchase order tomorrow”
and “order the capital equipment immediately thereafter.”
Also on April 12, 2006,
Griselda Ibarra, a SPS business analyst, sent Caime an e-mail with an attached
purchase order (the “first purchase order”).
She stated that the first purchase order was being provided “to proceed
with the purchase of the [g]as [i]njection [c]ompressors.” The first purchase order provided for a
delivery date of September 12, 2006, a total net price of $4,143,066 for the
purchase of three gas injection compressor packages, a “[d]eposit to secure the
delivery of the specified equipment in order to meet the Project schedule” in
the amount of $414,307 (10% of the total purchase price) that would be payable
“[u]pon [a]cceptance of this [o]rder,” and the payment of another 10% “[u]pon
submittal of [d]rawings and Release to Proceed (to be on or before [May 8,
2006]).” It further provided that the
order would be “subject to mutual agreement of [t]erms and [c]onditions between
WPS and Expro” and “valid until [May 8, 2006] unless Expro issue[d] a revised [p]urchase
[o]rder to proceed.”
On April 13, 2006, Tom
Sawyer, responding by e-mail to Galvin on behalf of WPS regarding the first
purchase order, explained that WPS could not accept the first purchase order
“in its present form and content” and the parties “must resolve these issues
today before 2:00 p.m. or risk missing the deadline for the Dresser-Rand price
increase.” Sawyer also forwarded Galvin
an e-mail from Caime wherein he provided more detail about WPS’s concerns. In this e-mail, Caime noted that the delivery
date should instead be September 14, 2006 (22 weeks from April 13, 2006); the
“order amount” was insufficient in that it covered only 10% of the order value
and did not “cover the cost of the equipment”; and the first purchase order
provided for the payment of the “second 10%” “only after” WPS received a
release to proceed, which would not allow WPS to “get paid for the drawings.” Caime further noted that the first purchase
order was set to “expire[] on May 8th” and contained “no specific mention of
cancellation charges.” Caime explained
that WPS would “have to order a lot of material before May 8, [2006]” to
satisfy the purchase order and comply with the delivery date and there would “be
other charges from vendors that [would] also apply.” Caime stated that WPS needed to obtain an
agreement “today” before WPS ordered the motors and compressors, the purchase order
“ha[d] to be for the full amount of $4,143,066,” and WPS “ha[d] to have a full
release subject to the cancellation charges stated in [WPS’s] proposal and
other [substantiated] costs.” Caime explained
that WPS needed these agreements “today,” otherwise, WPS would have to wait
until May 8th and “rebid this thing to SPS.”
However, later that same day,
Caime, in regard to the first purchase order, sent Ibarra another e-mail
stating that the first purchase order was “limited to the purchase of the gas
compressors,” it was “acceptable for that purpose alone,” and WPS would “order
the compressors today.” [2] He noted that the “Dresser-Rand compressor
order is subject to cancellation charges in accordance with their published
schedule.” Caime explained that Sawyer
had already responded with other comments on the remainder of the first purchase
order and WPS would need a “full ‘release to proceed’ prior to determining a
project schedule, detailed engineering, procurement, milestones or a commitment
on delivery of the packages.” He noted
that the “project start date is tied to the ‘release to proceed’ date and
acceptance of the purchase order,” which WPS “hope[d] to accomplish . . . early
next week.” Caime copied Galvin and Waldemar
Finol, the SPS project engineer, on this e-mail. There is no evidence that any representative
at SPS otherwise instructed WPS to withhold ordering the compressors. [3] Following Caime’s e-mail, WPS ordered the
compressors from Dresser-Rand, and, on April 17, 2006, WPS ordered motors from
Reliance Electric.
Also on April 17, 2006,
Sawyer sent Galvin an e-mail stating that WPS expected to receive a revised
purchase order with a “full release to proceed.” On April 18, 2006, Ibarra sent Caime a revised
purchase order (the “second purchase order”), which contained the revisions concerning
the price and the cancellation fees, but retained a delivery date of September
12, 2006 and the total price of $4,143,066.
The second purchase order further stated that “Expro’s liability for
cancellation of the order on or before [May 8, 2006] [would be] $217,361.32,” it
would be subject to mutual agreement to terms and conditions, $414,307 (10% of
the total price) would be payable “[u]pon
[a]cceptance of this [o]rder,” another 10% would be payable “[u]pon submittal
of [d]rawings and Release to Proceed (to be on or before [May 8, 2006],” and it
would be “valid until [May 8, 2006] unless Expro issue[d] a revised Purchase
Order to proceed.”
On April 18, 2006, Caime
circulated the second purchase order to others at WPS, noting that there were
“still problems” regarding the May 8, 2006 “cessation date” and the “limitation
of charges for cancellation.” He
explained that if the order was “acceptable today,” the delivery date should instead
be September 19, 2006. Detailing the cancellation charges that would
be calculated on May 8, 2006 from Dresser-Rand, Reliance, and WPS, which totaled
$189,449, Caime noted that the proposed cancellation liability of $217,361 was
“not enough.” He explained that this would “not cover” WPS
for “coolers, valves, pipe, studies, etc.” if WPS was to “proceed diligently
from this point,” but it “would be OK if [WPS] only did engineering and no
further procurement until” obtaining a full release. If that were the case, a delivery date would
have to be calculated after May 8, 2006. Caime concluded that if WPS “act[ed] towards a
September delivery then [WPS] need[ed] a statement that ‘all valid costs
associated with cancellation will be to [SPS’s] account,’ or [WPS] should do
only engineering until the release date.” [4]
On April 20, 2006, Caime
sent Ibarra an e-mail with an attached “conditional acceptance,” and he requested
SPS’s “further addendum” by April 28, 2006.
He stated, “We are proceeding from today basis [sic] a full release in
anticipation of your agreement to the changes we request to your purchase
order.” Caime noted that the “current
schedule is [September 21] for all three packages to be ready to ship.” The attached “order acceptance form” identified
four “order deviations” in regard to SPS’s second purchase order. First, WPS noted that a revised purchase
order should reflect a delivery date of September 21, 2006, not September 12,
2006. Second, WPS noted that the revised
purchase order should provide that “Purchaser gives his full release to proceed
and will pay all valid costs associated with any order cancellation.” Third, WPS noted that the phrase “and Release
to Proceed (to be on or before [May 8, 2006]” needed to be stricken from the
revised purchase order. And fourth, WPS noted
that the statement that the purchase order would be valid until May 8, 2006
unless “Expro” issued a revised purchase order to proceed needed to be
“stricken in its entirety.” In regard to all deviations, WPS stated that the
“[o]rder is conditionally accepted pending Purchaser’s acceptance of the
requested changes and receipt of a revised purchase order addendum on or before
[April 28, 2006].”
It is undisputed that SPS
did not issue a revised purchased order by April 28, 2006. [5] Nevertheless, communications continued
between the parties about outstanding matters associated with the project. On May 2, 2006, Sawyer sent Finol an e-mail
as a “reminder that a response to [WPS’s] list of deficiencies to the Expro/SPS
Purchase Order” and a full release was “[d]ue on May 8, 2006” and the parties
needed to establish a date the next week for a project “kick off” meeting.
On May 5, 2006,
representatives of SPS, including Finol, and WPS, including Caime and Sawyer,
met at “Expro’s” office in Houston for the “Gas Injection Compressor Kick Off Meeting.” Finol recorded the minutes of this meeting, which
reflect, among other things, that Caime was “handling over from Proposal to the
Project Stage” and Matt Hulin had been assigned as the WPS Project
Manager. The minutes also reflect that a
project schedule was to be issued “on Monday,” a “vendor data list and status” was
to be issued the “next week,” and the compressor delivery days were scheduled
for September 7, 14, and 21. The minutes
further reflect that WPS informed the parties that “design ha[d] not yet
initiated,” SPS had “express[ed] concerns about the Engineering being [three]
weeks late,” and WPS had “express[ed] that they [would] meet the due date.” On May 8, 2006, the parties traded further e-mails
about project specifications. Hulin then
sent Finol a letter requesting instructions for instrument specifications that
had been discussed and noting that WPS would begin ordering the “I&E
devices” and Finol would receive “an updated project schedule for the three
packages no later than tomorrow.”
On May 9, 2006, Ibarra
sent Caime another revised purchase order (the “third purchase order”), in
which Expro noted that the dates in the second purchase order had been
changed. The third purchase order
provided for a delivery date of September 21, 2006, reflected a total purchase price
of $4,143,066, stated that “Purchaser gives his full release to proceed and
will pay all valid costs associated with any order cancellation,” noted that
the order was “subject to mutual agreement of [t]erms and [c]onditions between
WPS and Expro,” provided for payment of $414,307 “[u]pon [a]cceptance of this [o]rder,”
provided for the payment of another 10% “[u]pon submittal of [d]rawings and Release
to Proceed (to be on or before [May 11, 2006]),” and stated that the order was
“valid until [May 11, 2006] unless Expro issue[d] a revised purchase order to
proceed.” A May 9, 2006 WPS internal
e-mail reflects that the third purchase order complied in some respects with WPS’s
order acceptance form but did not comply in all respects because “the full
release date has been extended” to May 11, 2006. As is detailed below, the parties then subsequently
traded e-mails regarding project specifications, drawings, and other matters
relevant to the project.
In response to an SPS
inquiry, Sawyer, on May 12, 2006, sent Galvin an e-mail detailing, as of June
2, 2006, the “Major Equipment Cancellation Charges,” including $325,000 for the
motors and at least $160,000 for the compressors. He also noted that he was waiting on
information from the cooler vendor. On
May 16, 2006, Finol sent Sawyer an “official notice” that the purchase order
had “been cancel[led].” Finol instructed
WPS to “stop all the work that is going on now and prepare and submit the
cancellation fees as of today.” He also apologized
for “all the problems” that the cancellation may have caused.
WPS, on May 20, 2006, sent
SPS an invoice detailing “valid costs associated with order cancellation per
executed purchase order” and “payment of cancellation fee” per the purchase
order. The invoice reflected costs
associated with cancellation, including $139,008 for the Dresser-Rand compressors,
$292,340 for the Reliance Motors, and $9,928 for the Amercool Process Coolers,
for a total of $441,276. The invoice
further reflected a “cancellation fee” of $414,306.60.
SPS then filed against WPS
a declaratory judgment action regarding its “rights and duties with respect to
WPS in relation to the purchase of gas compressor packages.” Expro Americas subsequently intervened in the
suit. SPS alleged that the parties had failed
to reach an agreement on the terms and conditions of a contract; no contract
existed between them; if a contract existed, it was based on the April 10, 2006
proposal; the cancellation fee of $217,361.32 was the amount owed to WPS; the
terms of any contract were ambiguous; and it was SPS’s intent to only pay
cancellation fees in the event of cancellation.
WPS then filed its answer and counterclaims against Expro Americas and
SPS for breach of contract, quantum meruit, and promissory estoppel.
After trial, in regard to
WPS’s breach-of-contract claim, the jury found that Expro Americas and SPS had agreed
to purchase three gas injection compressors from WPS for $4,143,066 “with a
payment . . . of 10% on acceptance” and “all valid costs resulting from order
cancellation.” The jury further found
that both Expro Americas and SPS had failed to comply with the agreement and
WPS was entitled to $855,342.55 in damages for Expro Americas and SPS’s breach
of contract. The amount awarded by the
jury comported with the amounts invoiced by WPS, i.e., the costs associated
with cancellation payable to the component providers as well as the fee of
approximately $414,000 owed to WPS. [6] The trial court granted Expro Americas’s
motion for judgment notwithstanding the verdict and entered a judgment providing
that WPS take nothing from Expro Americas.
The trial court then entered judgment in favor of WPS against SPS,
awarding WPS damages in the amount of $855,342.55 and attorney’s fees.
Liability of Expro Americas
In
its sole issue, WPS argues that the trial court erred in granting Expro
Americas judgment notwithstanding the verdict because Expro Americas issued two
“relevant purchase orders,” it is “identified as the decision-making entity in
the three other purchase orders issued by its subsidiary [SPS],” its “name
appears throughout written correspondence between” the parties, it issued the
“full release to proceed” to WPS, and it “agreed to be responsible to WPS for
damages caused by order cancellation.”
In
response, Expro Americas asserts that there is no evidence that it was a party
to any agreement with WPS, the negotiations and purchase orders “were between
employees of SPS and WPS exclusively,” the name “The Expro Group” is a trade
name and does not refer to a specific company, the reference to Expro Americas
in the third purchase order [7]
“was a clerical error,” and Kevin Galvin signed the third purchase order on
behalf of SPS and had no authority to sign it on behalf of Expro Americas.
A trial court may
grant a motion for judgment notwithstanding the verdict if a directed verdict
would have been proper. Tex. R. Civ. P. 301. We review a trial court’s granting of a
judgment notwithstanding the verdict under a legal sufficiency standard, viewing
the evidence and inferences in the light most favorable to the jury’s
finding. See City of Keller v. Wilson ,
168 S.W.3d 802, 807, 823 (Tex. 2005) (stating that “the test for legal
sufficiency should be the same for summary judgments, directed verdicts,
judgments notwithstanding the verdict, and appellate no-evidence review”). We will sustain the granting of a judgment
notwithstanding the verdict based on “no evidence” when the record discloses
one of the following: (1) a complete absence of evidence of a vital fact; (2)
the trial court is barred by the rules of law or evidence from giving weight to
the only evidence offered to prove a vital fact; (3) the evidence offered to
prove a vital fact is not more than a scintilla; or (4) the evidence establishes
conclusively the opposite of a vital fact.
Id . at 810.
To determine whether
there is sufficient evidence to support the jury’s findings against Expro
Americas, we begin by analyzing the significant number of documents entered
into evidence. WPS presented to SPS its
original proposal, which Caime submitted via e-mail to Finol using an e-mail
address that referred to the Expro Group.
The April 11, 2006 letter of intent, authored by Galvin, from SPS to WPS
contained the Expro Group logo, the SPS logo, and SPS’s contact
information. In the letter, Galvin
stated that “Expro” was pleased to inform WPS of its intent to issue a purchase
order. In its order acceptance form, WPS
identified its customer as “ExproGroup–SPS.”
In multiple e-mails, WPS representatives referred to their customer as
“Expro Group/SPS” or, simply, “SPS.” WPS
communicated with SPS representatives using e-mail addresses that referred to
the “Expro Group” or “surfaceproduction.com.”
The minutes of the May 5, 2006 kick-off meeting were printed on
letterhead with the logo of the Expro Group and SPS, identify “Expro” as the
meeting location, identify the attendees as WPS and SPS, and set forth various
actions that were required by SPS.
The first and second
purchase orders identify the purchaser as SPS and contain the contact
information for SPS, but also include references to Expro. Significantly, the third purchase order
identifies “Expro Americas, Inc.” as the purchaser, includes references to
“Expro” and SPS, and contains the contact information for “Expro
Americas.” The third purchase order was
sent to WPS with a cover letter stating that it was being sent by Griselda
Ibarra, a business analyst for SPS, who described it as a “revised” order. Like the first two purchase orders, the third
purchase order, within its terms, referred to “Expro” without making any
distinction concerning which particular corporate “Expro” entities were involved
in the transaction. Following
cancellation of the project, WPS submitted its invoice to Kevin Galvin at
SPS.
The undisputed
evidence at trial reveals that Expro Americas is SPS’s parent company and the
“Expro Group” is a “trade name.” Eric
Nelson, who is Expro Americas’s in-house counsel, but who also appeared as SPS’s
corporate representative at trial, stated that Expro Americas had “no
involvement whatsoever with this project” because it “is an upstream oil and
gas service company” that provides services like well testing, wireline work,
and subsea well intervention—“[t]hings that are unrelated to engineering
production facilities.” In regard to the
third purchase order, which is the critical contractual document in this case,
Nelson testified that Ibarra had mistakenly printed it on an Expro Americas
form and it should have instead been printed on an SPS form. Although Expro Americas asserts that the jury could
not disregard this evidence, neither it nor SPS offered any detailed evidence to
explain how Ibarra, who was allegedly only an employee of SPS, could have
accidentally accessed and used Expro Americas’s purchase orders. Additionally, as discussed below, neither
Expro Americas nor SPS offered any reasoned explanation as to why other
high-level Expro Americas and SPS personnel who reviewed the purchase order had
failed to alert anyone that the transacting party was SPS and not Expro
Americas, at least until the dispute arose.
In addition to the
fact that Expro Americas is the contracting party identified in the third
purchase order, WPS contends that it presented evidence that the term “Expro,”
as used in other correspondence, purchase orders, and documents, could have
been used to refer to “Expro Americas.”
WPS asserts that “the documents issued from the SPS/Expro Americas side
of the negotiations created confusion because they interchangeably and
indiscriminately referred to ‘SPS’ and Expro as the contracting party, without
clearly or consistently identifying who ‘Expro’ was other than Expro
Americas.” Because of this, WPS argues, the
jury reasonably identified Expro Americas as at least one of the contracting
parties and the jury “obviously did not find Expro Americas’ evidence
persuasive.”
Although Expro
Americas presented some contrary evidence, legally sufficient evidence supports
the jury’s findings that Expro Americas was a contracting party. As noted above, the third purchase order,
which is the most important contractual document in this case and which
provided WPS with the important “release to proceed,” expressly identifies
“Expro Americas Inc.” as the purchaser.
It also includes the contact information for Expro Americas and contains
other references to Expro. Tom Sawyer of
WPS testified that when WPS received the third purchase order, WPS “noticed”
the identity of the contracting party.
Sawyer explained that “on one they use SPS, and the other they use
Expro. The[y] use them interchangeably and together.” Sawyer further explained that when WPS
received the third purchase order, WPS did not call and ask “ where’s
SPS.” The identification of Expro
Americas as the contracting party, he explained, was not a concern because “continually
it was SPS/Expro Group” throughout the parties’ dealings. The jury could have
considered Sawyer’s testimony as evidence that the identification of Expro
Americas as the purchaser in the third purchase order was consistent with WPS,
SPS, and Expro Americas’s prior business practices of treating both Expros
Americas and SPS as parties contracting with WPS.
Tom Caime of WPS
similarly testified that he considered the contracting entity “to be one
entity, Expro/SPS” because “[t]hat’s how they presented themselves. That’s how their paperwork was. Their e-mails [were] interchangeable.” Caime stated that he “didn’t see any
distinction” between the companies. When
asked about who he believed Galvin represented in his communications, Caime noted
that because he had seen Galvin’s name on “Expro” and SPS documents, he
“assume[d] [Galvin] represent[ed] whatever piece of paper he sends me.” Although Expro Americas asserts that “Expro,”
when used in the general sense, could have referred only to the “Expro Group”
and not “Expro Americas,” it has not cited any evidence conclusively
establishing this assertion. Again,
although there is evidence that the “Expro Group” is a trade name, and although
Nelson’s testimony may suggest that this trade name refers to a group of
“Expro” companies and not to any specific company, there is no conclusive
evidence that use of the terms “Expro Americas” and “Expro” in the relevant
communications and purchase orders exclusively referred only to SPS or the
Expro Group and not Expro Americas.
WPS also presented
evidence of another purchase order that was issued to another vendor on the IPF
project. This order, like the third
purchase order issued to WPS, identifies “Expro Americas, Inc.” as the
contracting party. The jury could have
considered this order in evaluating Expro Americas’s assertion, and
specifically the credibility of Nelson’s testimony, that Expro Americas had no
involvement in the IPF project. The jury
could have also considered this evidence in rejecting Expro Americas’s argument
that any general reference to Expro in the transactional documents could only
have referred to SPS or the trade name “Expro Group” and not Expro Americas.
Moreover, Nelson
admitted that SPS had never submitted a corrected third purchase order to remedy
the alleged mistake in identifying Expro Americas as the contracting
party. The jury could have considered
the fact that the cover letter attached to the third purchase order reflected
that Kevin Galvin, Nick Matthews, and Nelson (Expro Americas’s and SPS’s in-house
counsel, and SPS’s corporate representative) were all copied with the third
purchase order. Yet, there is no
evidence that they raised any concern that the third purchase order had been
printed on the letterhead of Expro Americas.
It is undisputed that Galvin signed the third purchase order, and there
is evidence that Galvin actually read the e-mail transmitting this third
purchase order. Additionally, the only
evidence offered to explain the alleged clerical mistake of SPS’s issuance of
the third purchase order on Expro Americas’s letterhead was Nelson’s testimony
that Ibarra had access to “that purchasing system just like any other clerk who
would prepare purchase orders would have access.” Neither Expro Americas nor SPS provided any detailed
evidence to explain how Ibarra, who was allegedly only an employee of SPS, had
access to Expro Americas’s forms. [8] Based
upon the evidence concerning the execution of the third purchase order and the
lack of evidence explaining the issuance of the third purchase order by Expro
Americas, the jury could have chosen not to believe Expro Americas’s assertions
that it was not involved in any way with the project. The jury could have reasonably found that the
third purchase order was issued by Expro Americas and Galvin had the authority
to bind Expro Americas in the transaction. [9]
Although we recognize
that Expro Americas presented conflicting evidence on whether it was a
contracting party with WPS, we conclude that the evidence is legally sufficient
to support the jury’s liability findings against Expro Americas. Accordingly, we hold that the trial court
erred in granting Expro Americas’s motion for judgment notwithstanding the
verdict.
Breach
of Contract
In their first issue, Expro Americas
and SPS argue that they did not enter into an enforceable contract to purchase
equipment from WPS because there is no evidence that WPS accepted an offer from
SPS, the evidence conclusively establishes that there was no meeting of the
minds between the parties, and material terms were left open for future
negotiation. In their second and third
issues, Expro Americas and SPS argue that the “requirement” that they had to first
provide WPS with a “release to proceed” prevented the formation of an
enforceable contract because this requirement “rendered any promise illusory” and
was a “condition precedent to liability or performance of any agreement.”
We will sustain a legal-sufficiency or
“no-evidence” challenge if the record shows one of the following: (1) a
complete absence of evidence of a vital fact, (2) rules of law or evidence bar
the court from giving weight to the only evidence offered to prove a vital
fact, (3) the evidence offered to prove a vital fact is no more than a
scintilla, or (4) the evidence establishes conclusively the opposite of the
vital fact. City of Keller , 168
S.W.3d at 810 . In conducting a legal-sufficiency
review, a “court must consider evidence in the light most favorable to the
verdict, and indulge every reasonable inference that would support it.” Id .
at 822. If there is more than a
scintilla of evidence to support the challenged finding, we must uphold
it. Formosa
Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc. , 960 S.W.2d
41, 48 (Tex. 1998). “‘[W]hen the
evidence offered to prove a vital fact is so weak as to do no more than create
a mere surmise or suspicion of its existence, the evidence is no more than a
scintilla and, in legal effect, is no evidence.’” Ford
Motor Co. v. Ridgway , 135 S.W.3d 598, 601 (Tex. 2004) (quoting Kindred v. Con/Chem, Inc. , 650 S.W.2d
61, 63 (Tex. 1983)). However, if the
evidence at trial would enable reasonable and fair-minded people to differ in
their conclusions, then jurors must be allowed to do so. Keller , 168 S.W.3d at 822 ; see
also King Ranch, Inc. v. Chapman , 118 S.W.3d 742, 751 (Tex. 2003). “A reviewing court cannot substitute its
judgment for that of the trier-of-fact, so long as the evidence falls within
this zone of reasonable disagreement.” City of Keller , 168 S.W.3d at 822 .
In conducting a factual-sufficiency
review, we must consider, weigh, and examine all of the evidence that supports
or contradicts the jury’s determination. Plas-Tex,
Inc. v. U.S. Steel Corp. , 772 S.W.2d 442, 445 (Tex. 1989); London v. London , 192 S.W.3d 6 , 14–15
(Tex. App.—Houston [14th Dist.] 2005, pet. denied). We may set aside the verdict only if the evidence
that supports the jury’s finding is so contrary to the overwhelming weight of
the evidence as to be clearly wrong or unjust.
Cain v. Bain , 709 S.W.2d 175,
176 (Tex. 1986); Nip v. Checkpoint Sys.,
Inc. , 154 S.W.3d 767, 769 (Tex. App.—Houston [14th Dist.] 2004, no pet.).
The jury found that Expro Americas and SPS agreed to purchase
three gas injection compressors from WPS for $4,143,066 “with a payment . . .
of 10% on acceptance” as well as “all valid costs resulting from order
cancellation,” both Expro Americas and SPS failed to comply with the agreement,
and WPS was entitled to $855,342.55 in damages. The
elements of a valid contract are “(1) an offer, (2) an acceptance, (3) a meeting
of the minds, (4) each party’s consent to the terms, and (5) execution and
delivery of the contract with the intent that it be mutual and binding.” DeClaire
v. G & B McIntosh Family Ltd. P’ship , 260 S.W.3d 34, 44 (Tex. App.—Houston
[1st Dist.] 2008, no pet.). The determination of a meeting of the minds,
and thus offer and acceptance, is based on the objective standard of what the
parties said and did and not on their subjective state of mind. [10]
Baroid
Equip., Inc. v. Odeco Drilling, Inc. , 184 S.W.3d 1, 17 (Tex. App.—Houston
[1st Dist.] 2005, pet. denied).
The testimony of the
witnesses and the documents in the record reveal that, during the course of the
negotiations between the parties spanning April and May 2006, Expro Americas
and SPS were generally attempting to limit their commitment to WPS until they
could obtain firmer commitments from Conoco, but, at the same time, Expro
Americas and SPS were seeking to ensure that, in the event the construction of
the IPF proceeded, they could satisfy the deadlines imposed by Conoco. In contrast, WPS was attempting to solicit
firmer commitments from Expro Americas and SPS because, in order to provide them
with delivery of the compressor packages by the required September time frame,
WPS needed to both order component parts and also commence its own work. As a result of these conflicting positions
and interests, the number of documents relevant to the formation of the
contractual relationship is substantial.
As early as April 13,
2006, WPS informed Expro Americas and SPS that, pursuant to the first purchase
order, it was compelled to order the compressors from Dresser-Rand. This evidence, together with the evidence
establishing that the parties had subsequently acknowledged that the
compressors had been ordered and there would be cancellation charges, supports
an implied finding that the parties had a meeting of the minds at least with
respect to that portion of the purchase order.
The evidence establishes that WPS ordered the compressors to avoid a
price increase that would have been passed to Expro Americas and SPS, WPS
communicated this fact to them, and they raised no objections. In fact, subsequent documents, including the
minutes of the kick-off meeting, which was held at the “Expro” location, support
an implied finding that Expro Americas and SPS consented to this action. Moreover, after third purchase order was
cancelled, Waldemar Finol, on behalf of “The Expro Group-SPS Inc.,” instructed
WPS to both stop work and submit cancellation charges, thus acknowledging that
the parties had a contractual relationship for both the timely acquisition of equipment
and the performance of work. Thus, contrary
to Expro Americas and SPS’s assertion, there is ample evidence that the parties
entered into an enforceable contract.
In regard to whether the
parties entered into a contract on the terms that the trial court submitted to
the jury, we note that the evidence supports an implied finding that, at a
minimum, the parties, following the issuance of the first purchase order, entered
into a contract regarding the purchase of certain component parts and the
payment of cancellation charges. Thereafter,
WPS replied with a conditional acceptance to the second purchase order. WPS also stated that its conditional
acceptance depended upon the receipt of a revised purchase order by April 28,
2006. Although it is undisputed that Expro
Americas and SPS did not issue a revised purchase order by this date, the
evidence in the record reveals that the parties continued their discussions and
negotiations over those matters that had yet to be resolved. Written communications reveal that the
parties operated as if they had additional time to resolve the outstanding
differences. Significantly, on May 5,
2006, the parties conducted a joint kick-off meeting where, as revealed by the
minutes, SPS representatives expressed concern that WPS’s engineering work had
been delayed, but WPS indicated that it intended to timely perform by the due
date. The minutes reflect that WPS was
performing under the terms of the second purchase order by making further
preparations for the compressor packages and staffing decisions for the project,
such as assigning a project manager. WPS
committed to issuing a project schedule the next week, and Expro Americas and SPS
agreed to furnish WPS with certain information.
On May 8, 2006, Hulin, WPS’s project manager, followed up with Finol and
asked that he send to Hulin the “instructions for the instrument
specifications” that they had discussed so that WPS could “begin ordering”
certain devices. Hulin also explained
that an updated project schedule would be forthcoming the following day. Finol replied by e-mail with the
instructions.
Expro Americas and SPS submitted
their revised third purchase order on May 9, 2006, agreeing in writing to virtually
all of the matters that had remained unresolved to that date. They, for the first time, agreed upon the delivery
date of September 21, 2006, which WPS had previously demanded. And the record supports an implied finding
that, even before May 9, 2006, the parties were operating with the
understanding that the September 21, 2006 delivery date controlled and WPS was
already performing its work even though Expro Americas and SPS had waited several
weeks to issue the revised third purchase order. [11]
Second, and most importantly, Expro Americas
and SPS provided in the third purchase order a “full release to proceed” and
agreed to “pay all valid costs associated with any order cancellation.” In his testimony, Galvin conceded that the
term “Release to Proceed” “basically means that one party is in agreement,” authorizing
the other party to go forward. Galvin
also stated that it would be fair to interpret the “Release to Proceed”
language as authorizing WPS to “immediately” go forward. The evidence indicates that WPS had previously
sought the release to proceed so that it could “diligently” perform its
obligations under the contract. The jury
could have reasonably concluded that WPS, having now obtained the release in
the third purchase order and Expro Americas and SPS’s promise to pay
cancellation charges and a 10% initial payment, was contractually obligated to
perform and meet the delivery date. And,
the third purchase order specifically included the requested payment terms of
WPS.
One potential issue that
remained was that Expro Americas and SPS had not stricken the language that the
order was valid until May 11, 2006 unless “Expro” issued a revised “purchase
order to proceed.” And Expro Americas
and SPS did not alter the language that the second 10% payment would not be
made until they provided a release to proceed.
However, neither of these matters would have precluded the formation of
an enforceable contract for the terms stated.
As noted above, the third purchase order contained an unconditional
release to proceed. Additionally, there
is no evidence that Expro Americas and SPS ever issued another revised order
affecting the validity of the third purchase order. By its plain terms, the order was valid and
ripe for acceptance.
WPS presented sufficient
evidence that it relied upon the third purchase order to continue its work so
that it could furnish Expro Americas and SPS the compressor packages by the agreed
upon delivery date. For example, on May
9, 2006, Ibarra sent WPS representatives “specifications, drawings, and
datasheet[s]” relevant to the compressors.
On May 10, 2006, Hulin e-mailed Finol the “preliminary General
Arrangement Drawing for the Expro Project,” and Hulin solicited Finol’s general
comments and recommendations on the “overall layout” as well as location of the
“Variable Volume Pockets for the Cylinders” in relationship to the “edges of
the skid.” The jury could have reasonably
found that this evidence established that WPS was proceeding diligently in
performing its duties under the contract.
On May 11, 2006, Hulin sent Finol an e-mail inquiring about technical
issues associated with the “attachment system for the compressor skid to the
barge floor.” On May 12, 2006, Hulin
furnished Expro Americas and SPS with an updated project schedule and vendor
document delivery schedule. The record contains numerous other e-mails and documents
illustrating that WPS, throughout this time frame, was performing services
under the contract by ordering component parts and working with vendors. On May 12, 2006, in response to Galvin’s
inquiry about possible cancellation charges, Williamson at WPS stated that it
was ordering “I beams today” so “cancellation charges” were “increasing.” Sawyer then e-mailed Galvin, asking that he
“keep [him] posted on the progress” of the project and explaining that WPS was
“moving ahead in order to maintain our targeted delivery dates for the
compressor packages.” Again, from all of
this evidence, the jury could have reasonably found that both parties were
aware that WPS was operating under the terms of the third purchase order to timely
deliver the compressors.
Expro Americas and SPS argue
that they did not have an enforceable contract with WPS because the terms and
conditions of any agreement were left open for future negotiations. We recognize that, “[i]n order to be legally
binding, a contract must be sufficiently definite in its terms so that a court
can understand what the promisor undertook.” T.O.
Stanley Boot Co., Inc. v. Bank of El Paso , 847 S.W.2d 218, 221 (Tex. 1992);
see also Lamajak, Inc. v. Frazin , 230
S.W.3d 786, 793 (Tex. App.—Dallas 2007, no pet.) (“For an enforceable contract
to exist, the legal obligations and liabilities of the parties must be
sufficiently definite.”). The material terms of the contract must be agreed
upon before a court can enforce the contract, and “[w]here an essential term is
open for future negotiation, there is no binding contract.” T.O.
Stanley Boot Co. , 847 S.W.2d at 221 ; Lamajak ,
230 S.W.3d at 793 (“The contract must be certain and clear as to all essential
terms or the contract will fail for indefiniteness.”). Here, WPS, in its conditional acceptance of
the third purchase order, did not reassert its previous requests concerning
other terms and conditions and accepted the contract on the governing terms. Even if these matters had not been resolved,
there is nothing in the record to substantiate Expro Americas and SPS’s assertion
that a previously unidentified term or condition precluded the formation of an
enforceable contract. Although Expro
Americas and SPS cite us to various terms and conditions that were not agreed
upon, the jury could have concluded from the evidence presented that there simply
were no remaining unresolved material terms that precluded the parties from
entering into a contractual relationship.
Accordingly, we hold that the evidence is legally and factually
sufficient to support the jury’s breach-of-contract findings.
Finally, in regard to Expro
Americas and SPS’s argument that the purchase orders were illusory because of the
requirement of a “Release to Proceed,” which they considered to be a condition
precedent, we note that their third purchase order actually contained an
unequivocal release to proceed. There is evidence that, at the time they had issued
the third purchase order, WPS had already been performing in anticipation of timely
delivering the compressor packages. To
the extent that there is any merit to Expro Americas and SPS’s arguments
regarding the release to proceed, those arguments were mooted by the issuance
of the release. [12]
We overrule Expro Americas and SPS’s first, second, and third issues.
Damages
In their fourth issue, Expro
Americas and SPS argue that the trial court “erred in instructing [the jury] on
the measure of damages” and WPS presented “no evidence of damages recoverable
for breach of contract” because neither of the damage elements submitted by the
trial court, i.e., the “agreed payments” and the “cancellation charges,”
“define[d] a measure of damages recognized by Texas law
for breach of contract.” Expro Americas and SPS further assert that
WPS presented no evidence of “benefit of the bargain” or reliance damages,
“cancellation charges . . . are not damages,” there is “no evidence of any
expenditure made by WPS,” and the “agreed progress payments” and the
cancellation charges do not provide any evidence of the “reasonable value of
any goods or services.”
At the trial court’s charge
conference, Expro Americas and SPS objected to the submitted breach-of-contract
damages question on the ground that there is no evidence “of any of the
elements of contract damages,” “lost profits,” or “reliance damages.” Expro Americas and SPS also tendered a
question that would have instructed the jury to award “[e]xpenditures made by
[WPS] in preparation for or performance of the agreement, if any.” After
refusing Expro Americas and SPS’s tender, the trial court asked the jury to
determine the amount of damages that would fairly and reasonably compensate WPS
for its damages caused by Expro Americas and SPS’s breach. It instructed the jury that it could consider
as the “elements of damages” “the amount of any agreed payments
to WPS” and “valid cancellation charges that WPS incurred in connection with
the cancellation of the agreement.” The
jury found that WPS was entitled to
$855,342.55 in damages, which generally comported with the amounts invoiced by
WPS, i.e., the cancellation charges payable to the component providers, approximately
$441,000, and the initial “agreed payment” owed to WPS, approximately $414,000.
WPS, in regard to the jury
instruction and its incurred cancellation charges, presented
evidence of the amounts that it invoiced for each cancellation charge, and
these amounts totaled approximately $441,000. [13] WPS also introduced into evidence
communications with each of its third-party component providers reflecting
their cancellation charges to WPS. For
example, WPS presented the testimony of Tony Blue of Reliance Electric, who
confirmed that WPS owed his company $292,000 for its cancellation fees, and he explained
that WPS was on “credit hold” because WPS still owed these amounts. The evidence of cancellation charges
demonstrated actual outstanding amounts for which WPS was being held
accountable as a direct result of the cancellation of the contract.
The third purchase order expressly
provided that Expro Americas and SPS
would pay WPS “all valid costs associated with any order cancellation.” In fact, when Expro Americas and SPS sent WPS their cancellation notice, they
expressly instructed WPS to submit the cancellation fees. Yet, Expro
Americas and SPS ultimately refused to pay the cancellation charges,
based, at least in part, upon their contention that they had not formed a
contractual relationship with WPS. We have detailed above the evidence supporting
the jury’s finding that the parties did form a contractual relationship. We have also detailed the evidence
demonstrating that the terms of the parties’ contract included, among other
things, Expro Americas and SPS’s
agreement to “pay all valid costs associated with any order cancellation.” The trial court’s instruction to the jury that
it could consider these cancellation charges in awarding damages is supported
by the evidence. Moreover, the trial
court’s instruction was consistent with the instruction actually tendered by Expro Americas and SPS, which would
have allowed the jury to consider WPS’s
expenditures made in preparation for or performance of the agreement. Accordingly, we hold that the trial
court did not err in instructing the jury that it could consider, in
determining the damages caused by Expro
Americas and SPS’s breach, the cancellation charges incurred by
WPS. See
Chung
v. Lee , 193 S.W.3d 729, 733
(Tex. App.—Dallas 2006, pet. denied) (providing that party that has made
substantial investment in performing agreement that is later breached may seek
return of investment through recovery of reliance damages); see also E .A. Farnsworth , Contracts § 12.16, at 888–89 (1982) (noting
as examples of reliance damages party’s expenditures for labor and materials
and other costs of preparation and purchaser’s spending money or making
commitments for advertising, acquiring premises and equipment, hiring
employees, and the like). We
further conclude that, although there is some conflicting evidence on the
amounts of cancellation charges owed or paid by WPS as a result of Expro Americas and SPS’s cancellation
of the contract, WPS presented legally and factually sufficient evidence to
support an award of approximately $441,000 based upon incurred cancellation
charges.
In regard to the jury instruction pertaining to the “agreed
payments,” WPS presented evidence that the terms of the parties’ contract
included Expro Americas and SPS’s
agreement to pay WPS an initial payment of approximately $414,000 “upon
acceptance” of the order. It is
undisputed that Expro Americas and SPS
failed to make this initial payment. As
detailed above, WPS presented evidence demonstrating that, prior to receipt of the
cancellation notice, WPS was, pursuant to the contract, performing in an effort
to timely deliver the compressor packages by the September 21, 2006 deadline. For example, WPS presented evidence that it
had expended significant efforts associated with fabricating the compressor
packages, making staffing decisions, participating in technical discussions
with SPS, participating in meetings, working with vendors, and attending to
various other matters in furtherance of the contract. Moreover, in the cancellation notice, Expro Americas and SPS expressly
instructed WPS to “ stop all the work
that is going on now ,” thus acknowledging that WPS was working to
fulfill its contractual obligations at the time of the cancellation.
Based upon this evidence, the jury
could have rejected Expro Americas and SPS’s arguments that WPS was not owed
any amounts under the contract for its performance prior to receipt of the
cancellation notice. Instead, the jury
could have reasonably found from the testimony and documentary evidence that
WPS had engaged in substantial work in the performance of the contract. Additionally, in determining the appropriate
amount of damages to award, the jury could have also considered the amount of
the initial payment, agreed to by Expro Americas and SPS, due to WPS. The jury could have reasonably found that the
amount of the agreed payment related to the value of the services provided by
WPS in furtherance of the contract. [14] Here, WPS presented testimony that the agreed-upon
first and second 10% payments related to the work that WPS was required to perform
upon acceptance of the contract. For
example, WPS presented evidence that, during negotiations, it was concerned
about the payment structure because a 10% initial payment only covered “order
value” but would not have “cover[ed] the cost of equipment” that it needed to
procure. WPS was also concerned that,
unless modified, the payment structure would not have allowed it to “get paid”
for its drawings, vendor charges, and studies.
From the evidence, the jury could have reasonably inferred that an
amount generally consistent with the initial agreed payment represented the
approximate value of the services and work that WPS was required to perform
upon accepting the purchase order and during the weeks prior to the contract’s
cancellation, i.e., working with vendors, making staffing decisions, and participating
and engaging in technical discussions and work.
Moreover, the trial court’s instruction merely allowed the jury to
consider the amount of any agreed payments; the instruction did not compel the
jury to award the amount of the agreed payment. [15] Thus, we cannot say that the trial court
erred in instructing the jury that, in awarding WPS its breach-of-contract
damages, it could consider, along with the cancellation charges, the amounts of
any contractually-agreed payments. [16] Accordingly, we hold that the trial court did
not err in instructing the jury that it could consider any agreed payments and
charges in awarding damages to WPS. We
further hold that the evidence is legally and factually sufficient to support
the jury’s damages findings.
We overrule Expro Americas and SPS’s
fourth issue. [17]
Jury Instruction
In their fifth issue, Expro Americas and SPS argue that the
trial court erred “in commenting on the evidence and erroneously instructing
the jury that it could read together separate documents to form a contract
because there was no evidentiary basis for this submission, this instruction
pertains to a “matter for the court and not the jury,” it is a “rule of
contract construction, not of contract formation,” and “it presupposes that the
parties have made an enforceable contract.”
The instruction about which Expro Americas and SPS complain
provided,
Separate documents or contracts
pertaining to the same transaction may be read together to ascertain the
parties’ intent, even if the parties executed the instrument at different times
and the instruments do not expressly refer to each other.
Expro Americas and SPS acknowledge that this instruction is
generally a correct statement of law. See Fort
Worth Indep. Sch. Dist. v. City of Fort Worth , 22 S.W.3d 831, 840 (Tex.
2000) (providing that it is “well-established law that instruments pertaining
to the same transaction may be read together to ascertain the parties’ intent,
even if the parties executed the instruments at different times and the
instruments do not expressly refer to each other”; “a court may determine, as a
matter of law, that multiple documents comprise a written contract”; and “[i]n
appropriate instances, courts may construe all the documents as if they were
part of a single, unified instrument”). Expro Americas and SPS argue that the
instruction should not have been provided to the jury because there is no
controlling authority indicating that “unexecuted documents and e-mails that
were exchanged for purposes of negotiating a contract could be the basis for a
jury to construct a final agreement between the parties.”
At trial, Expro Americas and SPS objected to the trial court’s instruction
on the ground that the evidence in the case demonstrated that “if there was any
contract, it was contained within one particular purchase order and not in a
series of documents.” Although we are
not aware of any authority providing that a jury may not be instructed in
accord with this well-settled point of law, we conclude that the complaint
being raised on appeal, i.e., the trial court erred in instructing the jury as
it did because the instruction pertains to contract formation rather than
contract construction, has been waived. See Tex.
R. Civ. P. 274 (providing that party objecting to charge “must point out
distinctly the objectionable matter and the grounds of the objection” and
“[a]ny complaint as to a question, definition, or instruction, on account of
any defect, omission, or fault in pleading, is waived unless specifically
included in the objections”). We limit
our review to Expro Americas and SPS’s
complaint that there was no evidentiary support for the trial court’s
instruction, as this is the complaint that Expro Americas and SPS asserted at trial.
We conclude that there was an
evidentiary basis for the trial court’s instruction and the jury was entitled
to consider multiple documents in determining the parties’ intent regarding the
ordering of certain component parts and the remainder of the purchase order.
The jury was permitted to consider the first, second, and third purchase
orders, the conditional acceptance form of WPS, and the e-mails between the
parties regarding the terms. As discussed above, these documents were relevant
to the jury’s consideration of whether the third purchase order reflected the
resolution of the remaining material terms.
Accordingly, we hold that the trial court did not err in instructing the
jury on separate documents as relevant to ascertaining the parties’ intent.
We overrule Expro Americas and SPS’s fifth issue. [18]
Offer to Pay Cancellation Charges
In their eighth issue, Expro Americas and SPS argue that the
trial court erred in not admitting into evidence pretrial offers made by Expro Americas and SPS to WPS to “pay
cancellation charges” because Expro
Americas and SPS were entitled to prove that they had complied with the
contract by attempting to pay cancellation fees and WPS had failed to mitigate
its damages.
Evidence of “furnishing or offering or
promising to furnish . . . a valuable consideration in compromising or
attempting to compromise a claim which was disputed as to either validity or
amount is not admissible to prove liability for or invalidity of the claim or
its amount.” Tex. R. Evid. 408.
This rule “does not require exclusion when the evidence is offered for
another purpose, such as proving bias or prejudice or interest of a witness or
a party, negativing a contention of undue delay, or proving an effort to
obstruct a criminal investigation or prosecution.” Id. We review the trial court’s admission or
exclusion of evidence under Rule 408 for an abuse of discretion. MG Bldg. Materials, Ltd. v. Moses
Lopez Custom Homes, Inc. , 179 S.W.3d 51, 61 (Tex. App.—San
Antonio 2005, pet. denied).
At trial, Expro Americas and SPS sought to admit into evidence a July 10,
2007 letter to WPS in which it stated that it was “reaffirm[ing] its position
on cancellation fees,” its total liability was $217,361.32, “Expro” understood
that it might be “commercially advantageous to complete the procurement of the
Reliance electric motors in lieu of order cancellation,” and “[i]n order to
expedite this matter and as an effort of good will, Expro offers $325,000 for
settlement.” Additionally, in this
letter, SPS requested that WPS “revise the subject invoice” for $325,000 and
“resubmit for approval and payment.” Expro Americas and SPS also sought to
introduce testimony from Eric Nelson, its in-house counsel, and Sawyer that, in
August 2007, SPS increased its settlement offer to $414,000.
Despite their pretrial settlement
offers, Expro Americas and SPS’s
primary factual contention at trial was that they did not form an enforceable contract
with WPS. Based upon their theory, they
vigorously disputed their liability for both the cancellation charges as well
as the initial payment due to WPS. The
jury found against Expro Americas and SPS
on both issues, awarding WPS damages for both the cancellation fees and the
first payment required by the purchase order.
The jury awarded WPS damages well in excess of the amounts offered in
settlement. We conclude that, regardless
of whether there was a basis on which the trial court could have admitted Expro Americas and SPS’s evidence of
either settlement offer, Expro Americas
and SPS have failed to explain how, under these circumstances, the
exclusion of its proposed settlement offers probably caused the rendition of an
improper judgment. See Tex. R. App. P. 44.1(a)(1). Accordingly, we hold, to the extent that
there was any error in the exclusion of Expro
Americas and SPS’s settlement offers, such error was harmless. [19] See id .
We overrule Expro Americas and SPS’s eighth issue.
Conclusion
We reverse the trial
court’s judgment notwithstanding the verdict in favor of Expro Americas. We render judgment in favor of WPS on its breach-of-contract
claims against Expro Americas. Accordingly,
we render judgment that WPS recover damages from Expro Americas and SPS, jointly and severally, in
the sum of $855,342.55, and we further render judgment that Expro Americas and
SPS are jointly and severally liable for the prejudgment interest, attorney’s
fees, court costs, and postjudgment interest provided for in the trial court’s
judgment .
Terry
Jennings
Justice
Panel consists
of Justices Jennings, Higley, and Brown.
Justice Brown,
dissenting.
[1] See Tex.
R. App. P. 38.2(b)(1).
[2]
An
internal WPS e-mail from Tom Caime acknowledged that the first purchase order
had “some problems,” but he stated that Seth Williamson, WPS’s President,
wanted to “make a conditional acceptance and get the Dresser-Rand compressors
on order” that day.
[3]
WPS
introduced into evidence an internal e-mail from Caime to Sawyer. In this e-mail, Caime noted that Galvin had told
him that SPS would revise the purchase order to include the “full project
amount” and the “full release to proceed.”
[4]
SPS
introduced into evidence an internal WPS e-mail from Sawyer to Caime. In the e-mail, Sawyer agreed with Caime’s
comments, but noted that Sawyer had been “assured by Nelson Oliveros” of Conoco
that, in the event “the Expro Group” cancelled the order, WPS would “be made
whole” as Conoco would “purchase the units direct from WPS or pay all
cancellation charges.” Sawyer recommended
accepting the second purchase order so that the equipment could enter the
“production schedule ASAP,” and he noted that he would contact the “Expro [G]roup”
regarding cancellation costs. Although
SPS makes arguments in its appellate briefing concerning this alleged promise
from Conoco, there are no claims against Conoco before us.
[5]
On April 24,
2006, Caime recorded a WPS internal communication reflecting that Finol, the
SPS project engineer, had called to “make certain that the motors and
compressors are on order” and assure WPS that SPS would make the requested
changes to the purchase order.
[6]
In regard to
WPS’s quantum meruit claim, the jury found that WPS performed compensable work
for Expro Americas and SPS and the reasonable value of the work was
$855,342.55. In regard to WPS’s
promissory estoppel claim, the jury found that WPS substantially relied to its
detriment upon a promise made by Expro Americas and SPS and WPS was entitled to
damages in the amount of $441,276.25.
[7]
The
third purchase order actually identifies the corporate entity as “Expro
Americas Inc.” rather than “Expro Americas LLC.” Neither party discusses this distinction. Consistent with the parties’ treatment of the
matter in the trial court and on appeal, we will simply refer to both entities
as Expro Americas.
[8]
Counsel
for Expro Americas and SPS sought to elicit additional testimony from Nelson
regarding this issue, asking him, “[H]ow could or how did the Expro or these
purchase orders that were for this equipment that’s made the basis of this suit
. . . how in the world could those end up on letterhead for Expro Americas,
LLC?” However, counsel for WPS objected
to this question on the ground that Nelson lacked “personal knowledge,” and the
trial court sustained WPS’s objection.
Although Nelson subsequently testified that the issuance of the purchase
order on Expro Americas’s letterhead did not indicate to him that Expro
Americas “had any involvement in this transaction,” Expro Americas and SPS did
not offer any additional admissible evidence to explain how Ibarra could have
mistakenly accessed the forms.
[9]
In
post-submission briefing, Expro Americas and SPS argue that the jury was not
free to disregard the evidence that Ibarra had committed a clerical error when
she issued the third purchase order on Expro Americas’s letterhead instead of
SPS’s letterhead because this evidence was “uncontroverted,” there is
“overwhelming evidence that WPS” considered the contracting party to be SPS and
not Expro Americas, there is evidence that Expro Americas and SPS are distinct
entities, there is evidence that Expro Americas would not have been involved in
the IPF project, and the jury’s determinations regarding credibility had to be
“reasonable.” However, the evidence, as
outlined above, reveals that the jury could have disbelieved Expro Americas and
SPS’s explanation that Expro Americas was a stranger to the contract and the
project. For example, Expro Americas
issued to another vendor at least one other purchase order associated with the
project. Most importantly, the third
purchase order was issued by Expro Americas, and this order was reviewed by
in-house counsel for Expro Americas and SPS as well as Galvin. This contextual evidence would have permitted
the jury to reject Expro Americas’s assertion that it was not involved in the
transaction and reasonably find that all parties considered that both Expro
Americas and SPS were contracting parties with WPS.
In regard to the issue of authority, we note that the
jury was not instructed on the doctrines
of or the differences between actual and apparent authority. In its appellees’ brief, Expro Americas
contends that it is “undisputed” that Galvin “had no authority” to sign on
behalf of Expro Americas. However, this
fact was disputed at trial. Expro
Americas and SPS are essentially asking this Court to consider, in isolation,
and without regard to any of the other contextual evidence considered by the
jury, their evidence that Galvin was an SPS employee. They suggest that this evidence necessarily
establishes that Galvin lacked the authority to bind Expro Americas. However, as outlined above, WPS presented
evidence that (1) the third purchase order is on Expro Americas’s letterhead
and, as such, identifies Expro Americas as a contracting party, (2) the third
purchase order was received and reviewed by several representatives of Expro
Americas and SPS, including Galvin and Nelson, who would have know whether the
issuing of the third purchase by Expro Americas was a “mistake,” (3) there is
no evidence that anyone at Expro Americas or SPS raised this alleged mistake
until much later and after the dispute arose, (4) prior to the issuance of the
third purchase order, the parties had used “Expro” generally throughout their
correspondence and dealings and neither Expro Americas nor SPS made any efforts
to clarify the identity of the contracting party, (5) the testimony that Expro
Americas did not engage in the type of work at issue was contradicted by other
purchase orders issued by Expro Americas in
conjunction with the project, and (6) Expro Americas’s explanation for
this alleged mistake was very limited, even though Expro Americas was the only party
that could have offered further admissible evidence on this matter. Thus, although Expro Americas and SPS did
present evidence that Galvin was an SPS employee, the jury could have
reasonably believed that when Galvin signed the third purchase order, he had
the actual or apparent authority to bind Expro Americas. In light of this contextual evidence, the
jury was not required to accept the evidence that the third purchase order was
issued by mistake and signed by a representative that lacked the authority to bind Expro Americas.
[10]
WPS notes that, in determining the existence of a contract between it
and Expro Americas and SPS, we should also consider Article 2 of the Texas
Business and Commerce Code, which applies to the sale of goods. See
Tex. Bus. & Com. Code Ann. §§
2.101–.725 (Vernon 2009 & Supp. 2011); see
also Valero Mktg. & Supply Co. v. Kalama Int’l , 51 S.W.3d 345 , 351–52
(Tex. App.—Houston [1st Dist.] 2001, no pet.) (applying chapter 2 of the
Uniform Commercial Code to contract for sale of goods). WPS emphasizes that a “ contract
for sale of goods may be made in any manner sufficient to show agreement,
including conduct by both parties which recognizes the existence of such a
contract”; an “agreement sufficient to constitute a contract for sale may be
found even though the moment of its making is undetermined”; and “[e]ven though
one or more terms are left open a contract for sale does not fail for
indefiniteness if the parties have intended to make a contract and there is a
reasonably certain basis for giving an appropriate remedy. Tex. Bus. & Com. Code Ann. § 2.204.
WPS further emphasizes that “[u]nless otherwise unambiguously indicated
by the language or circumstances . . . an offer to make a contract shall be
construed as inviting acceptance in any manner and by any medium reasonable in
the circumstances.” Id . § 2.206(a). Finally, WPS
emphasizes that “[c]onduct by both parties which recognizes the existence of a
contract is sufficient to establish a contract for sale although the writings
of the parties do not otherwise establish a contract” and “[i]n such case the
terms of the particular contract consist of those terms on which the writings
of the parties agree, together with any supplementary terms incorporated under
any other provisions of this title.” Id . § 2.207(c). Tracking the language of these statutory
provisions, WPS tendered instructions for the jury to the trial court, which
refused to provide the instructions to the jury. Expro Americas and SPS argue that because the
trial court submitted the case to the jury under common law principles and
refused WPS’s proposed instructions, we should not consult these provisions in
conducting our sufficiency analysis. See Osterberg v. Peca , 12 S.W.3d 31, 55
(Tex. 2000) (providing that we assess sufficiency of evidence according to
instructions given by trial court to jury). We do not directly address the
parties’ dispute regarding the applicability of these provisions to our
appellate review because we conclude that, under the charge as given,
sufficient evidence supports the jury’s findings.
[11] The
original proposal indicated that WPS would need 22 weeks to complete its
work. The April 20, 2006 conditional
acceptance noted that the 22-week period would expire on September 21, 2006,
which was still used in the third purchase order. Thus, the jury could have reasonably inferred
that WPS’s work had to have commenced before May 9, 2006.
[12]
In
regard to Expro Americas and SPS’s argument that the third purchase order’s release to proceed was
not “full” because the order “still reserved to SPS the right to issue a revised
purchase order to proceed,” the jury could have reasonably concluded that the
fact that Expro Americas and SPS had retained the right to issue a revised order did not preclude
WPS from relying upon the order’s release to proceed diligently in satisfying
the terms stated in the order.
[13]
We
note that the record reveals that the term “cancellation charges” was used by
the parties below to refer both to amounts that WPS owed to third-party
equipment providers and amounts claimed by WPS once the contract was
cancelled.
[14]
We
understand our dissenting colleague’s concern as to whether the jury charge
properly reflected a reliance measure of damages. However, nothing in Texas law precluded the
fact finder from considering the amounts of the agreed payments in assessing
the value of the services rendered by WPS and then using the payment amounts to
calculate the appropriate amount to award to WPS to fairly and reasonably
compensate it for its damages resulting from Expro Americas and SPS’s
breach. Based upon the evidence presented
in this case, the jury could have determined that the agreed payments set forth
by the parties in the contract were relevant in assessing the value of WPS’s
services performed in furtherance of the contract.
[15]
In
their reply brief, Expro Americas and SPS complain that by “seeking the first
progress payment of 10% . . . for performing no work other than ‘accepting’ a
purchase order as well as cancellation charges it failed to prove it ever paid
to vendors, WPS is attempting to gain a windfall
and occupy a better position than if the contract had been performed.” (Emphasis added.) However, as noted above, WPS presented substantial evidence that it
did more than merely “accept” a purchase order. It presented evidence
concerning the work it performed and the cancellation charges that it owed to
several vendors. To the extent that
Expro Americas and SPS’s reply brief can be construed to suggest that the 10%
payment is a liquidated damage that is actually an unenforceable penalty
because WPS did nothing in furtherance of the contract other than to “accept”
it, Expro Americas and SPS ignore the conflicting evidence on this point. Moreover, although the issue is not clearly
raised on appeal, we note that a party asserting that a contractual provision
constitutes an unenforceable penalty bears the burden of demonstrating the
applicability of this defense. See Fluid
Concepts, Inc. v. DA Dallas Apartments Ltd. P’ship , 159 S.W.3d 226, 231
(Tex. App.—Dallas 2005, no pet.). Here,
Expro Americas and SPS’s argument is that WPS is achieving a windfall because
it performed no work other than merely “accepting” the purchase order. As we have discussed at length, WPS presented
evidence that it undertook significant efforts in performance of the
contract. The jury also could have
considered Expro Americas and SPS’s arguments in determining the amount of
damages to award to WPS because, as we note, the trial court simply instructed
the jury that it could consider the cancellation charges and agreed payments,
but its instruction did not compel an award of these amounts.
[16]
Again,
nothing in Texas law would have precluded the fact finder from considering the
agreed payments in determining the appropriate amount of damages to award to
WPS to compensate it for its work performed in furtherance of the
contract. Here, the parties,
sophisticated business entities, contractually agreed that WPS would be
entitled to certain payments, including a 10% initial payment. WPS presented testimony from which the jury
could have reasonably inferred that the first (and possibly even the second)
agreed payment was negotiated to compensate WPS for the services that it was
required to provide in furtherance of the contract upon accepting the
contract. Although an alternative jury
instruction might have more generally referred to a reliance measure of
damages, we conclude that the trial court, given the evidence before it, did
not commit reversible error in instructing the jury that it could consider the
agreed payments in determining the amount of damages to award to WPS.
[17]
Having
held that the evidence is legally and factually sufficient to support the
jury’s breach-of-contract findings, we need not consider Expro Americas and SPS’s
arguments in their sixth and seventh issues pertaining to WPS’s quantum meruit
and promissory estoppels claims.
[18]
Accordingly,
we need not address WPS’s separate arguments that the trial court erred in
refusing to provide the jury with instructions consistent with the above-quoted
provisions of the Texas Business and Commerce Code.
[19]
In
regard to Expro Americas and SPS’s arguments regarding mitigation, they do not
argue on appeal that they would have been entitled to a separate mitigation
instruction. However, we note that a
defendant that makes an offer of mitigation “cannot implicitly or explicitly seek
a release of the plaintiff’s claims,” but must make “an unconditional offer to
mitigate.” Gunn Infiniti, Inc. v. O’Byrne ,
996 S.W.2d 854, 859 (Tex. 1999). Here,
Expro Americas and SPS’s settlement offer required WPS to resubmit a revised
invoice for $325,000 before they would agree to pay any amount.